Investors repose faith in India's growth story despite Covid: Govt

The finance ministry on Tuesday said investors continue to trust the Indian growth story despite Covid-19, and rolled out statistics on foreign portfolio investment (FPI), foreign direct investment (FDI), and corporate bond markets to buttress its claims. 

"The Indian growth story continues to expand, as is demonstrated by the trends in FPI, FDI, and the corporate bond market flows that indicate and underline the beliefs of investors in the strength and resilience of the Indian economy," the ministry said in a statement here.

It said Covid-19 has drastically affected the investment climate in all economies of the world, causing sharp decline in the demand and supply equilibrium everywhere. 

"India has been no exception to this unprecedented economic shock. Yet, the investment sentiment in the Indian economy has been buoyed by the frequent and active intervention of the government, despite being hit by a worldwide pandemic," it said.

FPI

It said October and November have witnessed significant resurgence in FPI inflows, driven primarily by equity inflows. 

As of November 28, FPI inflows stood at Rs 62,782 crore. Of this, equity inflows amounted to Rs 60,358 crore, while FPI net investment in debt and hybrid instruments was to the tune of Rs 2,424 crore.

Regarding the equities segment, the inflows in November this year are the highest ever invested since the FPI data was made available by the National Securities Depository.

There has been a secular trend of positive net flows in the equity segment in November without any reversal to date. 

The highest inflow in total FPI investment was witnessed on November 12, marking a single day peak of Rs 11,056 crore.

FDI

Total FDI inflows through this route stood at $28.10 billion, of which equity inflows were $23.44 billion during the second quarter of the current fiscal year. 

This takes the FDI equity inflows to $30 billion during the first half of the current fiscal year, which is 15 per cent more than those during the corresponding period of 2019-20 (FY20).

August was a significant month when $17.49-billion FDI equity inflows were reported in the country. 

Both FDI equity inflows and total FDI inflows have shown a secular rise over the years, with FY20 seeing the highest FDI in the past six years. 

"The measures taken by the government on the fronts of FDI policy reforms, investment facilitation, and the ease of doing business have resulted in increased FDI inflows into the country," said the ministry.

Corporate bond market

The total corporate bond issuances amounted to Rs 4.43 trillion in the first half of the current fiscal year - 25 per cent higher than Rs 3.54 trillion in the same period last year, said the ministry. 

The narrowing spread with government securities stands testimony to the improved risk perception of corporate bonds. 

"Further, the cost of funds also moderated for both the government and corporates on the back of the Reserve Bank of India’s monetary easing and liquidity infusion, thereby bringing down yields in various segments of the debt markets," it added.